Friday, December 12, 2008

Lessons from Detroit

As Southerners, we often have a lot of pride about the South. In the case AGAINST a bailout of the Big 3 automakers it's difficult to have much sympathy. How many NEW plants have been built in the backyard of the UAW up North? While you're working on that answer, let's talk about Toyota in Georgetown, KY, BMW in Spartanburg, SC (both have been expanded numerous times), Mercedes and Honda in Alabama (coming soon-KIA) and several others built throughout the South. What's the big deal? Well, in the rust belt, average hourly wages run around $74 per hour. In the South, they run under $50. Why did the bailout fail? The UAW would not think of taking wage concessions under the bailout plan! Sure, I know that the fat cats at the top (who can afford to take cuts) have lived high on the hog long enough--and will continue to do so. They are certainly not without fault. However, I find it tough to sympathize with unions. There, I said it. My Libertarian thoughts come out at last! Every time the UAW stared down the Big 3, management eventually blinked. Wonder what would be going on now if the B3 had pulled a Caterpillar on them (look it up-management did not capitulate to the unions and the company is stronger than ever). I also think back to the end of Eastern Airlines. They went on strike, the company failed (I wonder how Delta and Northwest will fare if they keep playing that game by the way?). In any event, the bailout failed and even though it will be bad for the USA in the short-term, I think that it will be better for the industry as a whole.

While I'm on my automotive soapbox, I have seen hot European models for years--no, not Heidi Klum, autos that are built/sold only in Europe. Ford's European Focus is hot, the US version is not. Saturn's homerun Aura is based on a euro-platform. The Big 3 are getting the idea to a degree but where are the diesels? Why can't a Ford pickup have dual-element turn signals (translation: brake light/tail light and turn signal are all in the same bulb-if you have hazards on, brakes 'cancel' the flashing, etc)? No, we don't want "A" cars (those tiny city cars like the Smart Cars) but there are hot cars that we should have here. But no, we keep getting bloated SUV's (mainly b/c we keep buying them). What do I lust for? Yes, an Aston Martin would be nice, but I'd REALLY like a Mercedes ML or GL 320 Diesel (24.5 MPG) for Christmas (with a new lawfirm, not a chance this year : )

Saturday, November 1, 2008

Political Rant

This is an excellent article about our next President. On one hand, the Republicans had full control and BLEW IT but on the other, when the Democrats take over the Oval Office as well as the full Congress, God help our country. Work for a living? You will have to pay for someone who is not. Why is this on my Economy blog? Because the policies that will be implemented in January 2009 will more or less put a halt to any growth that this country will expect to see for the next few years. Again, I am NOT a fan of what the Republicans did. Shame on them for the largess, shame on them for the out of control spending. Iraq or not, they wasted more of our money than any other administration... ever! I continue to be impressed with Obama's oratory; despite the double talk, his talking points are actually seem believable. However, no amount of spin will take away the fact that he will put his hands into my pockets and give money to someone else. No, I don't make $250,000 a year (and having McCain won't guarantee that either) but take note of the fact that the $250K figure keeps dropping. What is your definition of rich? For many people, it's someone who makes more than they do. Not me; we live in America, the once-greatest country in the world. We read stories all the time about someone coming up with a great idea...and getting paid for it! That is so incredible and when I hear a 'rags to riches' story I smile to myself and mutter "God Bless America". Well, continue to add layers of regulation and restrictions, don't expect anything great out of America any time soon. Libertarians sometimes have the best ideas (keep your government out of my life, etc.) but they are too 'on the fringe' for my tastes (and for many other Americans). You may be surprised; take this quiz to see if you're truly left/right/center.

Again, I am no fan of what the "Republicans" (emphasis added, as they no longer represent true Republican ideology) did to our country. Likewise, the continued political partisanship bantering around sickens me. Actually, what have the Democrats done since taking over? No, I don't know either... I fear what will happen over the next four years--We'll plot that course this Tuesday I guess. Future generations will judge our actions: CHOOSE WISELY.

Wednesday, October 29, 2008

Economy a Mixed bag...

This article from the Wall Street Journal notes that home inventories are shrinking across the country (even though Atlanta still has a bit over a year's worth of inventory, where 'normal' rates should be in the 6-7 month range). Yes, we've had some price increases of late and some decent sales but we're still not out of the woods yet. I know that unemployment is up across the US and in Georgia and that does not bode well for housing. Unlike the go-go subprime times of late you now actually have to have a JOB as well as INCOME to support a home purchase/loan. Most loan programs require you to have some downpayment as well so it's rough out there for the average buyer. I can also wonder aloud about people who were planning to sell some stocks to come up with their down payment but the answer lies in the continued roller coaster that won't stop until the election at the earliest. It's not all doom and gloom (and I still bet that the media will say "hey, it's not all that bad" on November 5th, regardless of the winner!) and our country (State? City?) has persevered before. I can likewise opine that our current generation(s) will not be as likely to "step up" as strongly as "The Greatest Generation" did during WWII (not that we have that type of threat today, thank God). And one other ramble-FDR's New Deal (and all the public works projects) did not get us out of the Great Depression--WWII did. I can only hope that we don't have to have something that horrible occur to jump start our country!

Friday, October 24, 2008

Like Lipstick on a Pig!

Yes I know that politicians have hijacked that phrase but it's relevant to this posting, I swear! Looks like August's home price declines slowed slightly! Yes, they still fell, but LESS than in prior months! Okay, okay, so a .02% improvement is not that great but I'm just looking for any positives here! And for all you info geeks, we are right around the same price level as in Sept. 2005. So all you 'bubble' fans can see that we did have some major appreciation; likewise we have had some declines. At the end of the day, we still have oversupply, especially with foreclosures, but the major source of that oversupply (new homes) will continue to fall as unfortunately we have lost a lot of builders (or they stopped building spec homes).

Full disclosure--the same article I read noted that prices may still fall an overall 10% additionally (over the next 18 months) from the peak of 2006 so we're still in for a ride; hoping for a slow ride down a hill versus a jump off a cliff! Data is listed here if you're curious.

Wednesday, October 22, 2008

Economic Ramblings for the day

"How's your tummy?" could be a nice subtitle as we've really had a rollercoaster ride in the past month or so! I saw a headline this morning that oil has dropped under $70. It seems actually crazy to see gasoline under $3 after paying almost $5 after Hurricane Ike! I wonder how people are doing out there-did 'habits' really change over the past month? People parked or sold their SUV's and trucks and bought fuel-efficient vehicles. Will there now be a mad rush at the Hummer dealership again? What about actual driving habits? People took mass transit, cancelled optional trips, didn't go to the mall, etc. What's happening now? I'd be interested to see current trends!

One comment on the election-I truly feel that regardless of the winner next month, we will all be surprised at the media reports on November 5th that "Hey, it's not that bad out there". Regardless of your candidate, they NEED bad news right now. For example, Obama can blame Bush/McCain for the current economy. McCain can say that Obama's taxes will kill the economy. Barr? Well, he can just bug both candidates as an 'outsider'. Mark my words-the economy will miraculously 'get better' after the election. Oh, by the way, yes, I AM a cynic!

What's next for the Fed? Wow, seems like they want another round of economic stimulus checks. I would love to have some extra spending money for Christmas shopping, but I don't think that a) that is the answer and b) that I'll see a penny! How about you? Uncle Sam says SPEND!

A Visual Representation of the McCain/Obama Tax Cuts

The proposed tax cuts are interesting to say the least. Looks like everyone gets a cut under McCain, but Obama's are higher for people who earn less and he NAILS people who make a lot of money. Takes me back to my heavy metal rock-n-roll days of a band called Krokus. Their 'hit song'? "Eat the Rich"

The most entertaining? NEITHER one truly talks about how they'd pay for these cuts (well, big O pays for many of his cuts by socking it to those evil rich people). I really suggest you get out there and buy ATLAS SHRUGGED by Ayn Rand. Written in 1957; coming to the United States in 2008???

Wednesday, October 1, 2008

The hits keep coming! Now we're Socialists???

I was amazed to read this article. A TOTALLY different perspective than I had contemplated. Likewise, this one takes the Libertarian point of view of "Hands Off" and more or less says "too bad", thinking that Bankruptcy may be the best (inevitable?) course of action. And in a more partisan-ish (my word) article this one pretty much refutes Madame Pelosi's "Democrats are not to blame" concept. What do you think? I'm at a loss actually. First we drop over 700 points; then we rise almost 500. Even though today's loss on the Dow was a mere 19 points, I almost feel that the markets are saying "so what" to these proposals. It's a "Boy who cried wolf" situation in some respects, but at the end of the day, credit is still quite TIGHT. What would you do?

Tuesday, September 30, 2008

Younger Generation to the rescue?

I thought that this article made so much sense! I sometimes look at 'kids' (I can say that at 42, even if I act like a 12 year old!) and worry about our future... Well, here's a kid with (hopefully) a bright future! It really makes you think, eh? Take a look for yourself...

Monday, September 29, 2008

What REALLY caused this mess?

This is an interesting video which gives a pretty convincing argument, albeit a highly biased one. Take a look HERE and see what you think about what caused this current mortgage crisis. I must note that the 2nd half is more or less politically motivated and is obviously a McCain fluff piece. However, the base message to be taken away is a common theme of mine--unintended consequences of legislation. A great concept (getting people into houses) morphed into something that no one could have forseen. I am not a fan of this highly partisan mess we call Congress. For that matter, I wish our "leaders" (a very loose term!) would read the book "Term Limits" by Vince Flynn. No, I don't recommend such a radical course of action, but I sure wish our "officials" in DC would remember that they are elected to serve our country--not to pad their pockets or focus solely on re-election.

Wow, this really turned into a political rant! That was not my intention but when you see the mess that we're in today, it burns me up and blame is shared across the board-from DC to NY to unscrupulous lenders, etc. It's a mess, but hopefully this bailout bill will manage to somehow put us back on solid financial footing. We'll see; not so confident that it will be the 'magic bullet' needed but as the talking heads are repeating "Something needs to be done". Something, indeed....

Tuesday, September 23, 2008

What's next?

"What's next" could reference any number of ominous issues out there--Hurricanes, news reports, home sales reports, etc... I have been a relentless "cheerleader" of sorts for our industry and I have to admit that I am discouraged to know that I have no clue where we're going. While I still know that it's an amazing time to buy (rates are SO low-so are prices!) it's becoming so tough to get a loan. First-time homebuyers will lose the ability to obtain down-payment assistance on October 1st and other new loan requirements kicked in with the passing of the much-heralded Housing Bill. The takeover of Fannie and Freddie by the Feds has stabilized credit & rates dropped considerably, but we're in further uncharted waters with a proposed new bailout of the entire financial landscape. Mr. Obvious states "If financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse." My response to Bernanke is DUH! Long and short we have events that have not been seen since the Great Depression. This plan will enable the government to buy bad mortgages and other troubled assets held by banks & other financial institutions. The theory? If they get rid of the debts it will make them more stable so they will be more inclined to lend, which is the main issue at this point. The problem? I expect our "Do Nothing" Congress to add 'garbage' to the bill at the further expense of "We the people". They've done so much to ease gas prices, right?

Guess who caused this financial mess?

You need to read THIS ARTICLE to see the answer. You may be surprised; I sure was!

Friday, September 19, 2008

Ahoy there!

Okay, so the Economy is quite the story this week. But fear not, I have just the thing to take your mind off the rise and fall of the market--it's "Talk Like A Pirate" day yet again! Have fun and Hoist your Pirate flag and join in a collective ARRRRRRRR!!!

Monday, August 25, 2008

Downpayment Assistance (DPA) Eliminated. Now what?

October 1st may mean nothing to you, but to mortgage professionals/realtors, etc. it marks the end of Downpayment Assistance (or DPA). The new Federal Housing Bill ended this program. DPA allowed the Seller to bump their sales price anywhere from 3-6% to enable the buyer to receive 3% downpayment as required by FHA and up to 3% in closing costs. Nothing wrong with that scenario; someone wants to sell their home and someone wants to buy it (but they may not have enough money saved for a downpayment). As long as 1) the buyer can afford this home and 2) the property will appraise for the added value then the transaction makes sense. What is the problem? Well, I have heard that 1 in 3 homes using DPA were among the thousands that were foreclosed of late. With that info, I can understand the desire to delete this program so that banks lose LESS money! How can we fix this system? This video explains a bit, but again, how do you account for the huge numbers of losses as it relates to DPA? Perhaps you could base DPA amounts on credit scores/risk but other than that, what can you do? Anyone have any ideas?

Thursday, July 3, 2008

Short & Sweet...

I guess my main economics news is that we really need to get those buyers off the fence-rates will most likely continue to go up over the course of the Summer; I expect we'll see 7% for the 30-year by Fall. Lenders still have tight standards for loans; the main 'traffic' I am hearing about relate to short-sales or foreclosures. I guess those monster law firms are rolling in clover since they have a lock on the foreclosure business. Other than that, we're here and ready to handle your closing business, be it residential (purchase OR refinance) and/or commercial. Why us? Excellent service, prompt return calls/emails and honest answers. How can I help YOU?

Another thought on oil prices-if the dollar had remained strong in relation to other currencies, a barrel of oil would only be around $70-80. Rate cuts helped our economy, but hurt the dollar. Expect rising rates!

Friday, June 6, 2008

Spending and small towns

I find it interesting to read articles about the "Economic Stimulus Checks" that have been paid to-date. As you remember, this wealth redistribution program was supposed to push people to spend money to boost our economy. Well, just like ethanol, it has resulted in some unintended consequences again! Not that this is a bad thing, but it's not what the politicos really wanted--People have increased costs; most are using it as a cost of living boost. Sure, some people finally got that 32" Flatscreen, but most are simply filling their tanks or their grocery buggies. Speaking of economic stimulus, we really didn't find much at the outlets over the holiday weekend, though Joey found 2 pairs of Nike shoes for only $30 each and my daughter bought yet another Webkin (parents in the know understand... probably one of the best marketing coups I have ever seen! Makes 'beany babies' pale in comparison). I do have to praise small towns though-we stayed at our friends' place near Ellijay, but also went up to Blue Ridge. It turned out that they had an arts & crafts festival so we got to wander around and see some neat stuff. We also had the BEST Kettle Corn I have ever had in my life! Perfect balance of sweet/salt-I still keep thinking about it : ) Another anachronism? We saw the new Indiana Jones movie at the Swan Drive-in (one of FOUR still open in GA). Great time, the grounds were packed in! Sounds like Indy will rake in the highest $$ for the Summer. So see, SOMEONE is having success!

Friday, May 23, 2008

Atlas Shrugged? Economic/Political Ranting

Why a railroad photo? Well, you could look at it as symbolic of the rails traveling into infinity and 'into the great unknown'. Or you can think about how many of our goods travel by rail (vs. by truck, which is less efficient). How about feeling 'railroaded' by our government? Have you read Atlas Shrugged by Ayn Rand yet? I suggest you buy it soon as I am convinced that day by day we are moving towards the scenarios spelled out in that massive novel. Yes, it's brutal to get through about the first 100 pages (and John Galt's 100+ page "speech" is painful as well) but it truly seems that the overall theme of the book is coming to fruition. For example, we all know that oil prices are through the roof (try owning a diesel; I just paid $4.60/gallon). Why? As noted, supply and demand-we don't have great supplies (OPEC restrictions, Nigerian unrest, Venezuela's nutso 'leader', etc.) and demand is huge (i.e. CHINA & INDIA). Yes, the oil companies are making huge profits, but in all reality, the government is making more (through taxes) per gallon of gas than the oil companies are. Some fool from Congress wants to set up a "Reasonable Profits Board". Today the oil companies, tomorrow he'll be after YSP or trying to set your commissions! A plotline straight out of the book... By the way, if you have ANY mutual funds, YOU have most likely profited from oil profits too! My new 'cause' (now that I can get wine in GA) is to produce more oil/gas from DOMESTIC sources. ANWAR anyone?

Wednesday, May 21, 2008

Random article on Ethanol

This article spells out the misguided ethanol subsidies. One thing to note is that we have barriers to importing sugar cane--ethanol produced from sugar cane is MUCH cheaper than producing it from corn! Brazil is more or less self-sufficient due to their use of ethanol from sugar cane. Sigh.... our government at work. Unintended consequences at work!!!

While I'm at it, make sure your Presidential candidate supports the FAIR TAX!

Monday, March 31, 2008

MORE fun w/Economics: What is the FED up to?

The Fed has steadily cut short-term interest rates since Sept. 07 but this doesn't affect mortgage rates as people seem to think (well, they usually go UP!). Cutting the "Federal Funds" rate effectively lowers the Prime Rate, which can affect most Home Equity loans as well as credit card rates (not that they will actually lower your interest rate w/o you asking!). These cuts also make it easier for companies to purchase/finance equipment and inventory. Likewise, they have made more funds available to banks in order to provide liquidity. The markets wer spooked by one of Wall Street's larger investment houses' liquidity concerns. The Fed/JP Morgan stepped in to save the day (too little/too late?) and the markets are still in flux. Add in the higher costs of gasoline (though recent inflation reports actually dropped a bit) and you have a pretty rough mix. The Fed traditionally cuts rates to spike economic activity and raises rates to combat inflation. Energy costs and higher commodity prices threaten to slow their pace of cuts (another cut is widely expected next week). One interesting correlation is that bad news for the economy can be linked to lower interest rates (now @ 5.75% or so) Stop sitting on the fence waiting for 5%-make your move NOW as credit is still available. The issue today is can you still QUALIFY for a loan? Yes, lenders have already taken the subprime hit-they will do anything to not originate any NEW ugly loans. Common sense is gone, fear has taken over. MORE info from GSU's chief economist (yes, a REAL Economist, not a "faker" like me : )

Economics? But isn't that boring?

I know, Economics ARE boring-however, whether you're dealing with Buyers or Sellers (or if you are an IDIOT who is RENTING), you need to read this. As a closing attorney, I am a cheerleader for the real estate biz--chances are, if you're reading this, so are you! We all have a vested interest in things turning around. With that being said, you COULD choose not to believe what I'm going to say (remember-as a real estate pro people will think YOUR opinion is 'suspect' as well). Why? We say/WANT the market to do well but here are the FACTS: home sales are UP & sales prices are DOWN. Guess what? This trend WILL continue. Stats? Check out S&P Case-Shiller indices, the Wall Street Journal, Business Week, the NAR/NAHB & more. See the USA Today story linked HERE for more info (though a recent report wasn't as rosy for NEW homes). Why are prices still falling? INVENTORY. Yep, that evil "supply & demand"-you can't escape Economics! Too many homes = price drop. If you want to sell today, you may need to drop your price. If you have buyers sitting on the fence waiting for that price drop, there's another negative fact-rates are going to go UP. We are at historic lows right now; we're still around 6%. A $250K loan at 5.75%=$1198. IF you waited for a drop to $230K but rates go to 6.5%, suddenly you'll pay $1246. Is it really worth waiting? Another factoid for nervous nellies-stocks lost more $ in the last few months than housing did in the last year! Housing WILL rally-buy NOW!

Tuesday, February 26, 2008

Home sales down... DUH!

This is from the "But wait, there's more!" department. Yes, home sales are down and home prices are down. Again, I blame most of our current home sales crisis on the media--from back in the fall of 2006 with their doom and gloom of "Housing Bubble" ("The sky is falling, the sky is falling!") That caused a wholesale HALT of the real estate market. From there, yes, the sub-prime mess surfaced and now we're in the credit crunch period so all is truly a mess. BUT, sales prices aren't as bad as the media keeps screaming. Remember folks, just like "Location Location Location" all real estate is local... ATL market has only dropped 3.4% over the past year. Yes, nationwide the drop is higher (9.8% for the S&P/Case-Shiller composite based on their 10 large city metropolitan area, 9.1% for their 20 city composite). If you live in Miami, a 17.5% drop is horrific (unless you want to buy that million-dollar oceanfront condo for much less!) or better yet, Charlotte, NC with a 2.3% GAIN in sales prices! Way to go Charlotte! For all the cities, click HERE and look for the press release.

Look folks--rates are low, houses are priced to sell--before the Spring Fever hits ATL, get out there and BUY. If you wait, you WILL pay more... You heard it here first : ) Cheers, Bo

Economic Ramblings

Well, things are still not stellar. The economic stimulus package has passed, checks will be in the mail in May (sure!) Whatever are we to do until then? It seems that many people are predicting a continued slump in the first quarter-negative growth has even been mentioned. I am still cautiously optimistic about things picking up in the Spring. There are still a lot of "fence-sitters" out there, waiting for the "bottom". I chided a renter recently, telling her to buy buy buy! I was told 'Why should I try to catch falling knives?" She is convinced that prices will continue to drop. That may happen as there is still a decent amount of inventory out there and increased foreclosures mean even more homes on the market. However, I still feel that January was one of the best times to have purchased a home-rates were at incredible lows and prices were still very low. Rates have bumped up a bit, but we are still hovering around 40-year lows! Stockbrokers always say you can't predict (or time) the market-that's what buyers need to do now: BUY. A new issue? Banks are tightening credit. Nothing like an over-reaction to put the brakes on the economy! Yes, stupid loans were made. Yes, credit was extended to people who shouldn't have bought. But now, even people with good/average credit are being put through the wringer. It is taking longer to get people approved and to get them to the closing table. People are in trouble and "short sales" are all the rage. Time will tell. Hang in there...

Monday, February 11, 2008

A "WOW" email from a friend of mine!

This was sent to me by a friend. I am amazed at the simplicity of this explanation. Unreal to think this... Give it a read; see what YOU think!

There was a chemistry professor in a large college that had some exchange students in the class. One day while the class was in the lab, the Prof noticed one young man, an exchange student, who kept rubbing his back and stretching as if his back hurt. The professor asked the young man what was the matter. The student told him he had a bullet lodged in his back. He had been shot while fighting communists in his native country who were trying to overthrow his country's government and install a new communist regime. In the midst of his story, he looked at the professor and asked a strange question. He asked: 'Do you know how to catch wild pigs?' The professor thought it was a joke and asked for the punch line. The young man said that it was no joke.

'You catch wild pigs by finding a suitable place in the woods and putting corn on the ground. The pigs find it and begin to come everyday to eat the free corn. When they are used to coming every day, you put a fence down one side of the place where they are used to coming. When they get used to the fence, they begin to eat the corn again and you put up another side of the fence. They get used to that and start to eat again. You continue until you have all four sides of the fence up with a gate in the last side. The pigs, which are used to the free corn, start to come through the gate to eat that free corn again. You then slam the gate on them and catch the whole herd. Suddenly the wild pigs have lost their freedom. They run around and around inside the fence, but they are caught. Soon they go back to eating the free corn. They are so used to it that they have forgotten how to forage in the woods for themselves, so they accept their captivity.'

The young man then told the professor that is exactly what he sees happening in America. The government keeps pushing us toward Communism/Socialism and keeps spreading the free corn out in the form of programs such as supplemental income, tax credit for unearned income, tax cuts, tax exemptions, tobacco subsidies, dairy subsidies, payments not to plant crops (CRP), welfare, medicine, drugs, etc. while we continually lose our freedoms, just a little at a time.

One should always remember two truths: 1) There is no such thing as a free lunch. 2) You can never hire someone to provide a service for you
cheaper than you can do it yourself. If you see that all of this wonderful government 'help' is a problem confronting the future of democracy in America , you might send this on to your friends. If you think the free ride is essential to your way of life, then you will probably ignore this posting—But God help you when the gate slams shut!

What's not to LOVE?

Okay, I guess you've grasped the Love theme, as we're nearing Valentine's Day, but what is there to love about our current economy? Well, if you make less than $75k(solo)/$150k (couple) looks like our 'guvment' is going to ship you $$$ later in the year. Great news eh? An election-year gift to you and yours courtesy of the top 5% who pay all the bills! (Sorry, guess I should have put "Soapbox alert" on that one!) One 'plus' embedded in that legislation will allow a hike in current conventional loan caps (over $417K is considered a jumbo and can cost over 1% higher than a conventional loan). That may help some high-dollar properties refinance. Rates are still great, by the way. What's going on this week? Well, home sales and home values continue to slide (and actually rates did a bit as well) compared to previous years, but again, we haven't been hit quite as badly as many areas of the country. One major issue for ATL is the amount of foreclosures we've seen! Add that to current housing inventories and it's a saturated market for sure! Other ATL worries? Delta/Northwest Airlines merger? Could be happening soon, but will we lose our largest employer to Minnesota? (brrr!) Delwest? Norta? Either way, it's unsettling for ATL. Coming to a ballroom near you: "Get rich quick in Real Estate!" (While you can and should be buying real estate if you're able, this link will remind you that nothing is free!) Note: short sales are actually becoming 'popular' these days; be careful when swimming in those waters, however...

Friday, February 1, 2008

Now what?

There's so much crazy stuff going on. In late January (and for the first time in history), the Fed dropped rates an unprecedented .75% in between meetings. While they have taken emergency action in the past, they've never cut rates so dramatically. Likewise, they also cut it .50% at their recent scheduled meeting. The Fed Funds rate is now as low as the Spring of 2005! What does all this mean? Besides my normal disclaimer that this will not lower long-term mortgage rates, it mainly shows us that we're not out of the woods yet! The Wealth Redistribution Act of 2008 (oh, I'm sorry, the "Economic Stimulus Package") is still up for grabs in the Senate, but suffice it to say something will be passed very soon. I saw an article about the wealthy spending less and how that is killing middle-class workers. That's Reaganomics in action-if the rich have money, they spend more/hire workers to keep up with demand. If they have no money to 'play' with, then they will not need goods/services, so the 'little people' are hurt. It's funny how that works out, huh? A tax cut (or FAIR TAX) would be nice! By the way, ATL home prices fell only 2% for the past year, but had risen 4.3% over 2002-2005. Meanwhile, the National average was down 7.7%/up 14.3% respectively. Here I go again: IT'S A GREAT TIME TO BUY! We are still #7 for foreclosures (1.57%), but we aren't in as bad of shape as other states (US avg. 1.03%). Bargains are out there, SHOP NOW! Click HERE for that article about the evil rich!

Tuesday, January 22, 2008

Bernanke says BAM!

Wow, guess that "R" word is coming closer... like a freight train more or less. In case you missed it, the Fed lowered short-term rates by an unprecedented 3/4 point this morning. Not only that, they did it well before their scheduled meeting on 1/30 (where most expected that they'd drop it a half point anyway). So what does this mean? I'd say they are trying to stop the bleeding and give Wall Street some good news (esp. since the Dow 'futures' was showing about a 500-600 point drop--BEFORE the markets opened! So I guess that's why Ben and the boys did an Emeril and said BAM! How 'bout those rates? Again, we'll see what happens now!

Friday, January 18, 2008

Solution to our ills? Shop and Spend!

Did you "shop 'til you drop" this past Christmas/Holiday season? Evidently not enough as our 'guvment' is going to have to give us money to go spend! Why? To rev up our economy of course! Apparently there will be a news conference today in order to discuss an "Economic Stimulus" package. What does that mean? "Rebates". Huh? Well, remember what you have to play with every April 15th? Yep, now it's time for some fun wealth distribution, only this time hopefully we all share in the fun! "Putting money into the hands of households and firms that would spend it in the near term" is a priority, Bernanke told a House committee. So is this going to be enough to keep us out of a recession? I sure hope so (especially for a cost of $100+ Billion)! I know my family did its' part as we bought plenty of toys and video games for Christmas (as "modeled" by grandson Gavin and his "Rock Band" box--no, the game was not for him, but as is the norm, he had more fun playing in this box than with some of his toys. Not only that, he actually SLEPT in said box. Don't tell DFACS!). So what else will rev up the economy? Spend spend spend! It is expected that the Fed will lower the Fed Funds rate by another .50% on the 31st which will result in a Prime Rate of 6.75%. Again, this really does nothing for long-term mortgage rates (except for HELOCs or other programs tied to Prime) but it will make 'short-term money' cheaper for many small companies and/or manufacturers. We'll see what happens! Here's Bernanke's latest testimony to congress.